In a major setback for the GMR Group, Singapore?s Court of Appeal on Thursday ruled that the Maldivian government has the right to take back the operations of the Male airport. The ruling has been interpreted by the Maldivian authorities as the decks being cleared for the takeover of the operations of the Male airport on Friday midnight as per the earlier notice to GMR.
?Singapore Court of Appeal has passed judgment that the Maldives government has the authority to take back the airport. Maldives will go ahead with the transfer as scheduled,? Maldives President Mohamed Waheed?s press secretary Masood Imad told FE. ?We are not doing anything against the law. We are following it,? he added.
Incidentally, on Thursday the Indian government appointed Rajeev Shahare as the new high commissioner to the Maldives, replacing DM Mulay. The government?s stand so far has been that the Maldivian government should not take any arbitrary and coercive step on the airport issue.
The ruling came on an appeal by the Maldivian authorities against a December 3 ruling by the Singapore High Court which had stayed the termination of the contract to run and manage the airport. Though the order was contested by the Maldivian authorities that day also as an incorrect interpretation of the law by the judge, the ruling by the higher court has bolstered its stand. The GMR Group, which had welcomed the December 3 ruling and was insistent on moving ahead as per the law, did not offer any comment on Thursday, stating only that they would offer comments once they have examined the judgment.
The contract between the GMR Group and the Maldives government had stated that in case of any dispute the law of either UK or Singapore would prevail. The Maldivian government had on November 27 terminated the contract, which was given to GMR in 2010 during the previous regime of President Mohamed Nasheed. The new Maldives government has alleged that the previous government favoured the private company by allowing it to levy development fee and insurance charges of $27. GMR has said that as per their terms of agreement it was entitled to charge the airport development charge of $27 per international passenger from January 1, 2012. However, this had been disallowed by a Maldivian civil court in December 2011. GMR had subsequently written to the government that it would adjust the shortfall due to non-collection of ADC from the annual concession fee. The Maldivian government agreed to it but retracted from the commitment after March 31 and asked it to refund the adjusted payments.
According to the Maldivian government, the terms of the agreement agreed upon by the previous government would have led it to pay to GMR rather than earn revenues from it. It has been suggested that the Maldivian government would have had to shell out R2,800 crore over 25 years as per this agreement.
The project means a lot for the GMR financially because it is profitable and since Male is the gateway to the Maldives, it would provide for a healthy revenue stream. As reported by FE earlier, the GMR Group stands to lose around 20% of revenues coming from its airport operation business if it loses Male.
During the July-September quarter, GMR?s total revenues from the airport segment stood at R1,469 crore, of which around R300 crore came from the Male airport operations.
This was a 35% growth over the revenues booked during the same period a year earlier. The period also saw strong operational performance with a 10% year-on-year growth in traffic to 0.7 million passengers. Ebitda grew year-on-year to R71 crore and net profit at R57 crore was up 193%.
